June 2009

Posted by Martin Collings under UncategorizedComments Off on Possible clues from Gist on the future of social networking

Recently I was given beta tester access for a new service called Gist, but unfortunately for a number of reasons I never actually got into the password protected part of the site. This is a pity, as I really believe that understanding email interactions is a huge untapped area for a true social network, especially in a corporate environment; from what limited information I have it seems Gist are thinking in exactly the same way.

Main reason why I didn’t get past the joining screen was the onerous terms and conditions. There is no way I can agree to an NDA in exchange for being a beta tester. I am occassionally talking to airlines about social networking and whilst I have no intention of ripping off other people’s ideas, I can’t afford to have someone come back to me years down the track making these accusations because of some perceived commonality. As unlikely as I’m sure this scenario is, it reminds me a little of Nolan Bushnell from Atari, and I definintely don’t need a Ralph Baer coming after me in future years.

Maybe not the best example above, as Atari actually paid up, but there were a number of other reasons I didn’t end up using the service, even though it sounds very interesting.

The screenshot says my browser is too old, but the problem is I am waiting for a corporate wide upgrade so am stuck with an old version for now.

Corporate policy does not permit me to set up an auto-forward on my email, and without this I suspect I won’t get the full value from Gist.

Real market for a product like this is I suspect at the company level, and not sure how much value an individual user would get without all company emails from all employees being fed through the system.

So how is this relevant to travel? As I’ve hinted numerous times before, user generated content is not the primary strategy a new entrant (eg. airline) should be relying upon, and instead, better use of existing data and mapping this data to the behaviour of passengers and then people with whom your passengers have something in common is key – data is the airline’s best friend in this case.

And whilst on the topic of social networks, take a look at this excellent article from Wired on the Facebook vs Google battle and a great four step theory on the Facebook strategy for owning your internet experience, or at least something very close to owning it. And for a great quote on Facebook, it is hard to beat Andrew Keen’s recent answer when asked “Why do you think Facebook is doomed?”

“It is a narcissistic product that devalues the notion of friendship. The fact that Facebook is run by a 20-something with no business experience is a hint that it is a hubristic product that will end in tears. The only people willing to conform to their shady valuation is a Russian group. They’re rolling the dice on a public offering in the future at some point. But it’s still not clear what Facebook’s business model is. We’re not in the 1990s. You can’t do that anymore.”

Posted by Martin Collings under UncategorizedComments Off on Clever way to grow in flight duty free sales

Interesting to see two apparently contradictory aticles in Ryanair’s hometown newspaper on the same day last week, one about carry on restrictions and the other on potentially unrestricted carry on luggage. The first of the two is more interesting for airlines looking to grow ancillary revenue, as it raises a very interesting idea for how to push in flight duty free sales. By strictly enforcing a one bag carry on limit, and charging passengers €30 for a second carry on bag, your last minute airport purchase of a bottle of booze is going to end up being very expensive indeed.

I had a conversation a while ago with an airline executive tasked with growing in flight sales, but at the time none of us brought up this very clever idea from Ryanair. Apart from pushing the sale out of the shops and into the plane it also gives the airline a very valuable bargaining chip in negotiations with airport authorities over passenger charges and landing fees. Very clever indeed, just so long as you don’t get accused of unfair treatment of a six year old girl and her teddy bear by strictly enforcing these rules.

Posted by Martin Collings under UncategorizedComments Off on Kuala Lumpur Conference Wrap-up

Another airline conference is over; and it was definitely a productive first visit to Kuala Lumpur in Malaysia. I usually get quite a few people downloading slides when I put them up on this site, so here is the presentation from yesterday (KL 1A ecommerce June 2009 – Martin Collings). To make sense of slide four, be sure to read yesterday’s post. There were quite a few new slides shown that I have never presented before, the two most interesting probably being slide 9 on difference in conversation rates for the ancillary revenue hotels cross sell email by point of sale, and especially slide 19 showing potential revenue for an airline from better marketing of destination content. Slides 15-18 made the destination content story very tangible, and from the comments I received afterwards, there was undoubtedly a very strong interest in wanting to know more about ancillary revenue maximization through optimisation.

One interesting conversation earlier in the conference was with a senior airline executive I had not met previously who was very keen on the travel social networking space. The timing was a co-incidence as Virgin Altantic had only just launched their new site Vtravelled, but I have to agree with a lot of what Alex Bainbridge wrote on this subject, as I joined up to have a look and from the 15 minutes spent on the site so far, I can’t see how they are using their position as an airline to their advantage, apart from the branding aspect. Their brand is incredibly strong, but it is nowhere near enough to guarantee success. One aspect (only one of many) of a site that really understands what is needed will be a seamless integration between the social networking site and the manage my booking page. Inspiration alone will not be owned by an airline website, as there is no inherent advantage they bring to photo sharing, travel blogs, or itinerary sharing over what exists in the market today. I wish the guys behind Vtravelled every success, and I really hope they don’t fall into the Bluenity inertia trap; Vtravelled clearly have a lot more development work to do to make proper use of existing passenger data so as not to end up as another also ran travel social network.

“Our forward booking curve is moved closer to departure as customers have been deferring purchase decisions”
David Barger, CEO, JetBlue, 29 Jan 2009

“On the revenue side, travelers continue to book much closer to the time of travel, making projections difficult.”
Maurice J. Gallagher, CEO, Allegiant 20 April 2009

“Less visibility that we’re seeing, closer end bookings, everything that that means as well. That usually means less change fees because people are booking closer in.”
David Barger, CEO, JetBlue, 23 April 2009

Interesting, but then you look at the chart above and the 2009 dotted line for air sales seems to contradict the quotes. So is one of them wrong? Well, like most statistics, sometimes you need to look a bit deeper to really understand what is going on. In this case I suspect the booking window overall really is narrowing, but the chart I am showing is only internet B2C sites. Many airlines are making up for the loss in business travellers by discounting and selling more leisure fares. The other factor to be aware of is that the growth in online B2C is in international, with the domestic share of total online sales falling progressively over time. International has a much longer lead time than domestic as I illustrated very clearly in a presentation in Budapest late last year. Plus the data is heavily biased away from the USA, so all of these factors explain why the air lead time in the chart is increasing slightly even though the quotes above tell a different story.

But clearly the hotel data I have (or to be more fair, the data Mireille Boyer consolidated for me) shows a narrowing of the booking window for hotel sales. What implication does this have for managers of B2C airline websites wanting to sell more ancillary products? The answer lies in the Bow Tie Model, as the longer you wait between making the sale and trying to sell a car or hotel segment, the more chance that the passenger will buy on another website or in a location where the airline receives no commission. The reason why I added arrows to the rental car and hotel line is because an airline wanting to maximize conversion rates will be doing everything possible to drag those lines up and closer to the black line representing air sales, thereby reducing the external influence factors felt by your passenger. This is exactly what Air Pacific are doing with hotels. Any effort where you are successful in moving the average rental car or hotel sale leadtime up closer to the air leadtime will be an effort that was very well worth making.

Posted by Martin Collings under UncategorizedComments Off on New chart illustrating the impact of the recession on an airline’s ability to generate ancillary revenue (1 of 2)

That title has probably set a record for longwindedness, but when sitting in an airport lounge earlier this week I made a change to a slide that was first shown in Miami, and I am now much happier with it. The plan is to use it in a presentation to Asian and Middle Eastern airline website managers in Kuala Lumpur this Thursday, but I’m showing it here as a sneak preview because it tells a compelling story

In the presentation I’ll be using a slide build in Powerpoint so that the blue bracket on the right appears before the larger bracket on the left. For today I’ll leave you to ponder what the compelling story is that I’m referring to. I’ll continue this post tomorrow with my interpretation on this diagram and the implications it delivers for airline websites; but if you need a clue, go back and read the original post on the Bow Tie Model.

Posted by Martin Collings under UncategorizedComments Off on easyJet and Europcar renew their contract

Normally news that these two companies have extended their relationship, first formed in 2003, wouldn’t really warrant a mention here. But on a slow news day, it gives me an opportunity to recount a less than amusing episode from almost four years ago at Nice airport in the South of France.

I had booked a rental car via Amex corporate travel for a business trip in the peak of Summer, but when I arrrived to collect my car, Hertz and Avis were almost empty, but the line of people waiting in the queue at Europcar was longer than the gap between any two recently made watchable movies featuring Whoopi Goldberg. I heard people at the front of the queue saying they had been waiting two hours. There was very little shade and it seemed to be almost exclusively families who had travelled on easyJet for a week long Summer holiday, so the kids were even less impressed than their parents.

After waiting for about 20 minutes, and being on the verge of walking to the opposition to make a new rental car booking rather than wait for the car I had reserved with Europcar, I walked to the the front of the line and into a second doorway where an employee was asking for customers with corporate bookings. Ten minutes later I had my car and was driving out of there, but for the poor sods who had booked via easyJet, well they had another 90 minutes of waiting in the midday sun before collecting their keys.

And on a totally unrelated contact, did you know such a thing existed as the 14th International Conference on Thinking? If I thought the infants on the plane were annoying, well I obviously hadn’t yet sat in a restaurant next to three women attending this conference, as I did last night. At least for the next few nights I’ll be having dinners with customers and prospects, so that promises to be much much more entertaining.

Posted by Martin Collings under UncategorizedComments Off on BA Value Calculator hits the mark

Just arrived in Kuala Lumpur this morning as I’m presenting at an airline e-commerce conference later this week. Maybe it is karma, but after my post last week about infants in business class, I got it again today with an infant and a young child sitting with their parents a couple of rows in front of me; and making a racket for most of the journey. At least I’m not the only blogger taking up this topic at the moment, but I’ll try to drop it after today – unless of course some airline wants to do something innovative in this area like charge a new fee. Then I’ll be writing them up in the most glowing terms possible, and hopefully they will have hit on a successful new stream of ancillary revenue.

Jay Sorensen (fresh from the recent Datalex conference in Dublin) has written a book on airline ancillary revenue, as it is mentioned in this decent article on the current landscape regarding which airlines are charging for what. But by far the most interesting story I came across today, even though it is not exactly breaking news, is about the BA Value Calculator. Once before I mentioned Spanair trying a similar marketing strategy, but at the time made the comment that they needed to be more aggressive if they wanted to get any traction. British Airways are being a bit more aggressive by naming EasyJet and Ryanair, but when it comes to getting out a strong message against full a la carte pricing, Southwest make the case with the most clarity. If you want to take a look at the BA Value Calculator in action, here it is.

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Tim, you were actually one of the guys who, unbeknown to you at the time, actually inspired me to start writing back in early 2009. And yes, coming up with various models to try and better explain the rapid changes we were seeing in online travel is something we've both done a bit of over the years, so hopefully a couple of them stick.

Martin - congratulations on many years of a very valuable contribution to the travel tech, ancillary, air and general travel blogging scene. I have enjoyed your writing and enjoyed the chances we have had to sit together in restaurants and bars around the world. Great to have you back in Sydney and I look forward to adding another country to a list of lunch/ […]

Matt, it means a lot to get nice messages such as yours from people I don't know personally, but who enjoyed reading my work. I had someone yesterday saying they could not see my giving up frequent blogging and predicting I'd be back in 3-6 months, but at this stage I'll just focus on trying to learn as much about payments as I know about airl […]

Hi Martin, Thanks for all your posts over the last few years. I’ll miss your insights and commentary on the airline side digital / online / e-Commerce. I’ll keep an eye out for your posts on TNooz. Goodluck in the new role. Matthew T.

All the airline guys are coming out of the woodwork now that I'm leaving. Tomislav, I hope you continue with the relentless enhancement of online functionality, as you were a great customer for Amadeus to have, and also a great person to have reading this blog. You clearly showed a number of other airlines that being small was no reason not to innovate […]

The lengths I go to in order to keep a customer happy... Thanks for reading, and also for sharing your airline experience with Twitter when you wrote a guest post a while back. I enjoyed working with you.

Martin, thank you for your wonderful blog posts over the years. Being new to the airline industry around the time you started your blog, they sure gave me a lot of very useful insights. Also your dancing skills will be missed at the Amadeus conferences... . I'm sure you'll do a great job at Mastercard.